Brillian prices the secondary at $5.75
biz.yahoo.com
A substantially undermarket pricing. No wonder the stock has been tanking.
The recent prospectus gives good detail on the Kolin rebates/price protection. As I read it, it seems that the price protection is simply pass through cost savings from Kolin suppliers. The rebates are more questionable. The filing also has detail on the selling shareholders. Looks like two big holders from Syntax and Kolin are selling some shares. Vince, Wayne Pratt and the former Syntax CEO are NOT selling shares.
sec.gov
I'd expect BRLC to slash some or all of their credit facility, with an expectant savings in interest, which may be on the order of $4-5M in annual savings, or probably net $2-3M (less interest on cash).
Well, the only thing to do now is ride the roller coaster. Expect us to be stuck in the $5.50-$6 range for a while. No sense in buying in at this point. Let it settle out first. I'd like to also see a long term extension of the manufacturing agreement with Kolin that include the rebates/price protection. On this point, I'm not sure if they will be able to do this, given Kolin's aspirations to sell their own units on the market. If BRLC switches manufacturers, I'm not sure if they will be able to extract the same kind of price concessions - potentially impacting their gross margins.
The good part is that BRLC will be better capitalized going forward, but to fund this kind of rapid growth, they probably need even more money than they are raising. According to the SEC filing, the lack of working capital has hindered the company's growth and profitability. If you believe this statement (probably true), and if you believe in the demand for Olevia sets (I do), then although we suffer some pain now, we may be able to accelerate revenue growth and benefit from improve guidance going forward.
As a last note, look at the underwriters for the stock. Then look at who writes the analyst reports and who has the most aggressive target prices. Sheesh! |
